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19 July, 10:04

Taxes on the property Buyer Alan is purchasing are $3,200 due on December 31. If the closing is set for October 15, using the 365-day method, how much of the taxes will be credited to the buyer? A) The seller's share of $2,533.38B) The buyer's share of $666.62C) The seller's share of $2,525.76D) The buyer's share of $674.24

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  1. 19 July, 10:38
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    C). The seller's share of $2,525.76

    Explanation:

    The 365-day assumes a total of 365 days in a year. So the number of days up to when the closing is set should be determined as shown;

    Step 1: Determine total number of days up to October 15

    Total days up to October 15=Number of days in January+number of days in February+number of days in March+number of days in April+number of days in May+number of days in June+number of days in July+number of days in August+number of days in September+number of days up to October 15

    where;

    number of days in January=31

    number of days in February=28

    number of days in March=31

    number of days in April=30

    number of days in May=31

    number of days in June=30

    number of days in July=31

    number of days in August=31

    number of days in September=30

    number of days up to October 15=15

    replacing;

    Total days up to October 15 = (31+28+31+30+31+30+31+31+30+15) = 288 days

    Step 2: Determine the amount of taxes that will be credited to the buyer

    Sellers share = (number of days up to October 15/total number of days in a year) * Taxes due on December 31

    where;

    number of days up to October 15=288 days

    total number of days in a year=365

    Taxes due on December 31=$3,200

    replacing;

    Sellers share = (288/365) * 3,200=2,524.93 which is approximately equal to 2,525.76

    The seller's share of $2,525.76
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